Questions
The comparative balance sheets for 2021 and 2020 and the income statement for 2021 are given...

The comparative balance sheets for 2021 and 2020 and the income statement for 2021 are given below for Arduous Company. Additional information from Arduous’s accounting records is provided also.

ARDUOUS COMPANY
Comparative Balance Sheets
December 31, 2021 and 2020
($ in millions)
2021 2020
Assets
Cash $ 138 $ 98
Accounts receivable 207 228
Investment revenue receivable 23 21
Inventory 223 217
Prepaid insurance 21 30
Long-term investment 207 142
Land 231 167
Buildings and equipment 437 434
Less: Accumulated depreciation (113 ) (154 )
Patent 47 50
$ 1,421 $ 1,233
Liabilities
Accounts payable $ 67 $ 99
Salaries payable 23 35
Interest payable (bonds) 25 21
Income tax payable 29 34
Deferred tax liability 45 25
Notes payable 32 0
Lease liability 99 0
Bonds payable 232 309
Less: Discount on bonds (39 ) (42 )
Shareholders’ Equity
Common stock 481 427
Paid-in capital—excess of par 129 102
Preferred stock 92 0
Retained earnings 232 223
Less: Treasury stock (26 ) 0
$ 1,421 $ 1,233
ARDUOUS COMPANY
Income Statement For Year Ended
December 31, 2021
($ in millions)
Revenues and gain:
Sales revenue $ 575
Investment revenue 29
Gain on sale of treasury bills 2 $ 606
Expenses and loss:
Cost of goods sold 197
Salaries expense 90
Depreciation expense 11
Amortization expense 3
Insurance expense 24
Interest expense 45
Loss on sale of equipment 28
Income tax expense 53 451
Net income $ 155


Additional information from the accounting records:

  1. Investment revenue includes Arduous Company’s $23 million share of the net income of Demur Company, an equity method investee.
  2. Treasury bills were sold during 2021 at a gain of $2 million. Arduous Company classifies its investments in Treasury bills as cash equivalents.
  3. Equipment originally costing $104 million that was one-half depreciated was rendered unusable by a flood. Most major components of the equipment were unharmed and were sold for $24 million.
  4. Temporary differences between pretax accounting income and taxable income caused the deferred tax liability to increase by $20 million.
  5. The preferred stock of Tory Corporation was purchased for $42 million as a long-term investment.
  6. Land costing $64 million was acquired by issuing $32 million cash and a 15%, four-year, $32 million note payable to the seller.
  7. The right to use a building was acquired with a 15-year lease agreement; present value of lease payments, $107 million. Annual lease payments of $8 million are paid at the beginning of each year starting January 1, 2021.
  8. $77 million of bonds were retired at maturity.
  9. In February, Arduous issued a stock dividend (10.8 million shares). The market price of the $5 par value common stock was $7.50 per share at that time.
  10. In April, 1 million shares of common stock were repurchased as treasury stock at a cost of $26 million.


Required:
Prepare the statement of cash flows for Arduous Company using the indirect method. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

In: Accounting

Helmert Hospital operates a general hospital but rents space to separately owned entities rendering specialized services...

Helmert Hospital operates a general hospital but rents space to separately owned entities rendering specialized services such as pediatrics and psychiatry.  
Helmert Hospital charges each separate entity for patients’ services (Meals and laundry) and for administrative services (billings and collections). Space and bed rentals are fixed charges for the year, based on bed capacity rented to each entity.  
Helmert Hospital charged the following costs to Pediatrics for the year ended June 30, 2018.  
Patient Services Bed Capacity
(Variable cost) (Fixed Cost)
Dietary $600,000
Janitorial $70,000
Laundry 300,000
Laboratory 410,000
Pharmacy 300,000
Repairs and maintenance 30,000
General and administrative 1,300,000
Rent 1,500,000
Billings and collections 250,000
Total $1,860,000 $2,900,000
In addition to these charges from Helping Hospital, Pediatrics incurred the following personnel costs.
Annual Salaries—these salaries are fixed
Supervising nurses $100,000
Nurses 320,000
Assistants 180,000
Total $600,000
During the year ended June 30, 2018, Pediatrics charged the following and had the following relevant days:
$500 daily charge to patient for services
$6,200,000 Total Revenues
35 Relevant Range of daily beds
Required: Prepare your solution on the Part 1 Solution Worksheet. You must provide cell references to this worksheet to earn credit.

1. Prepare a contribution income statement for Pediatrics for the year ended June 30, 2018.

Peidatrics
Contribution Income statement
For the year ended June 30, 2018
Revenue
Less Variable Costs:
Patient Services
Contribution Margin
Less Fixed Costs:
Bed Capacity costs
Personnel costs
Profit
2. Calculate the number of patient-days that Pediatrics generated for the year ended June 30, 2018.  
3. Compute the contribution margin per patient days generated for the year ended June 30, 2018.
4. Calculate the minimum number of patient-days required for Pediatrics to break even for the upcoming year June 30, 2019.   Assume that revenue per patient-day, cost per patient-day,
cost per bed and salary rates for this upcoming year June 30, 2019, remain the same as for the year ended June 30, 2018.  
5. Calculate the operating leverage ratio.
6. If demand for patient days are projected to increase from the 2018 current patient demand in 2019: 6%
Calculate the increase in income using the operating leverage.

7. Prepare a contribution income statement showing the projected 2019 revenue and costs if the demand for patient days increases in 2019 to the projected increase stated in #6.

Pediatrics
Contribution Income statement
For the year ended June 30, 2019
Revenue
Less Variable Costs:
Patient Services
Contribution Margin
Less Fixed Costs:
Bed Capacity costs
Personnel costs
Profit
8. Using the profit for end of year June 30, 2018 and June 30, 2019, prove that the change in income between the two years equals the percentage change in #6.
9. Recommend to Pediatrics what they should do as the operations grow and have the ability to exceed the current capacity limits that Helping Hospital has put on Pediatrics.  
Include in your response on average how many beds Pediatrics is currently using and how much will this increase based on #6 projected increase in 2019.
Explain why the relevant range is important to know and understand and how it impacts your recommendation. Assume a 365 day year.

In: Accounting

Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility...

Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table provides data concerning the company’s costs:

Fixed Cost
per Month		 Cost per
Car Washed
Cleaning supplies $ 0.70
Electricity $ 1,200 $ 0.09
Maintenance $ 0.10
Wages and salaries $ 4,200 $ 0.30
Depreciation $ 8,500
Rent $ 2,100
Administrative expenses $ 1,700 $ 0.02

For example, electricity costs are $1,200 per month plus $0.09 per car washed. The company actually washed 8,400 cars in August and collected an average of $6.40 per car washed.

Required:

Prepare the company’s flexible budget for August.

Vulcan Flyovers offers scenic overflights of Mount St. Helens, the volcano in Washington State that explosively erupted in 1982. Data concerning the company’s operations in July appear below:

Vulcan Flyovers
Operating Data
For the Month Ended July 31
Actual
Results		 Flexible
Budget		 Planning
Budget
Flights (q) 61 61 59
Revenue ($350.00q) $ 16,500 $ 21,350 $ 20,650
Expenses:
Wages and salaries ($3,600 + $88.00q) 8,932 8,968 8,792
Fuel ($33.00q) 2,177 2,013 1,947
Airport fees ($870 + $32.00q) 2,682 2,822 2,758
Aircraft depreciation ($9.00q) 549 549 531
Office expenses ($230 + $1.00q) 459 291 289
Total expense 14,799 14,643 14,317
Net operating income $ 1,701 $ 6,707 $ 6,333

The company measures its activity in terms of flights. Customers can buy individual tickets for overflights or hire an entire plane for an overflight at a discount.

Required:

1. Prepare a flexible budget performance report for July that includes revenue and spending variances and activity variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two cost drivers it uses in its budgeting and performance reports—the number of courses and the total number of students. For example, the school might run two courses in a month and have a total of 62 students enrolled in those two courses. Data concerning the company’s cost formulas appear below:

Fixed Cost per Month Cost per Course Cost per
Student
Instructor wages $ 2,970
Classroom supplies $ 290
Utilities $ 1,250 $ 70
Campus rent $ 4,900
Insurance $ 2,200
Administrative expenses $ 3,900 $ 45 $ 6

For example, administrative expenses should be $3,900 per month plus $45 per course plus $6 per student. The company’s sales should average $880 per student.

The company planned to run four courses with a total of 62 students; however, it actually ran four courses with a total of only 54 students. The actual operating results for September appear below:

Actual
Revenue $ 51,660
Instructor wages $ 11,160
Classroom supplies $ 17,830
Utilities $ 1,940
Campus rent $ 4,900
Insurance $ 2,340
Administrative expenses $ 3,878

Required:

Prepare a flexible budget performance report that shows both revenue and spending variances and activity variances for September. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

In: Accounting

Forecasting with the Parsimonious Method and Estimating Share Value Using the DCF Model Following are the...

Forecasting with the Parsimonious Method and Estimating Share Value Using the DCF Model
Following are the income statement and balance sheet for Cisco Sytems for the year ended July 30, 2016.

Cisco Sytems
Consolidated Statements of Income
Years Ended December ($ millions) July 30,
2016		 July 25,
2015
Revenue
Product $37,254 $37,750
Service 11,993 11,411
Total revenue 49,247 49,161
Cost of sales
Product 14,161 15,377
Service 4,126 4,103
Total cost of sales 18,287 19,480
Gross margin 30,960 29,681
Operating expenses
Research and development 6,296 6,207
Sales and marketing 9,619 9,821
General and administrative 1,814 2,040
Amortization of purchased intangible assets 303 359
Restructuring and other charges 268 484
Total operating expenses 18,300 18,911
Operating income 12,660 10,770
Interest income 1,005 769
Interest expense (676) (566)
Other income (loss), net (69) 228
Interest and other income (loss), net 260 431
Income before provision for income taxes 12,920 11,201
Provision for income taxes 2,181 2,220
Net income $10,739 $8,981
Cisco Sytems Inc.
Consolidated Balance Sheets
In millions, except par value July 30, 2016 July 25, 2015
Assets
Current assets
Cash and cash equivalents $7,631 $6,877
Investments 58,125 53,539
Accounts receivable, net of allowance for doubtful accounts of $249 at July 30, 2016 and $302 at July 25, 2015 5,847 5,344
Inventories 1,217 1,627
Financing receivables, net 4,272 4,491
Other current assets 1,627 1,490
Total current assets 78,719 73,368
Property and equipment, net 3,506 3,332
Financing receivables, net 4,158 3,858
Goodwill 26,625 24,469
Purchased intangible assets, net 2,501 2,376
Deferred tax assets 4,299 4,454
Other assets 1,844 1,516
Total assets $121,652 $113,373
Liabilities
Current liabilities
Short-term debt $4,160 $3,897
Accounts payable 1,056 1,104
Income taxes payable 517 62
Accrued compensation 2,951 3,049
Deferred revenue 10,155 9,824
Other current liabilities 6,072 5,476
Total current liabilities 24,911 23,412
Long-term debt 24,483 21,457
Income taxes payable 925 1,876
Deferred revenue 6,317 5,359
Other long-term liabilities 1,431 1,562
Total liabilities 58,067 53,666
Cisco shareholders' equity
Preferred stock, no par value: 5 shaes authorized; none issued and outstanding		 -- --
Common stock and additional paid-in capital, $0.001 par value: 20,000 shares authorized; 5,029 and 5,085 shares issued and outstanding at July 30, 2016 and July 25, 2015, respectively 44,516 43,592
Retained earnings 19,396 16,045
Accumulated other comprehensive income (loss) (326) 61
Total Cisco shareholders' equity 63,586 59,698
Noncontrolling interests (1) 9
Total equity 63,585 59,707
Total liabilities and equity $121,652 $113,373



(a) Compute net operating assets (NOA) for 2016.
NOA = $Answer



(b) Compute net operating profit after tax (NOPAT) for 2016, assuming a federal and state statutory tax rate of 37%.(Round your answer to the nearest whole number.)
2016 NOPAT = $Answer

In: Finance

The following selected transactions relate to investment activities of Ornamental Insulation Corporation during 2021. The company...

The following selected transactions relate to investment activities of Ornamental Insulation Corporation during 2021. The company buys debt securities, intending to profit from short-term differences in price and maintaining them in an active trading portfolio. Ornamental’s fiscal year ends on December 31. No investments were held by Ornamental on December 31, 2020.

Mar. 31 Acquired 8% Distribution Transformers Corporation bonds costing $400,000 at face value.
Sep. 1 Acquired $900,000 of American Instruments’ 10% bonds at face value.
Sep. 30 Received semiannual interest payment on the Distribution Transformers bonds.
Oct. 2 Sold the Distribution Transformers bonds for $425,000.
Nov. 1 Purchased $1,400,000 of M&D Corporation 6% bonds at face value.
Dec. 31 Recorded any necessary adjusting entry(s) relating to the investments. The market prices of the investments are
American Instruments bonds $ 850,000
M&D Corporation bonds $ 1,460,000

(Hint: Interest must be accrued.)

Required:
1. Prepare the appropriate journal entry for each transaction or event during 2021, as well as any adjusting entries necessary at year end.
2. Indicate any amounts that Ornamental Insulation would report in its 2021 income statement, 2021 statement of comprehensive income, and 12/31/2021 balance sheet as a result of these investments. Include totals for net income, comprehensive income, and retained earnings as a result of these investments.

I only need help with the Income statement. Everything in place is correct however, it says it is incomplete.

Prepare the appropriate journal entry for each transaction or event during 2021, as well as any adjusting entries necessary at year end. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

No Date General Journal Debit Credit
1 March 31, 2021 Investment in bonds 400,000
Cash 400,000
2 September 01, 2021 Investment in bonds 900,000
Cash 900,000
3 September 30, 2021 Cash 16,000
Interest revenue 16,000
4 October 02, 2021 Fair value adjustment 25,000
Gain on investments (unrealized, NI) 25,000
5 October 02, 2021 Cash 425,000
Investment in bonds 400,000
Fair value adjustment 25,000
6 November 01, 2021 Investment in bonds 1,400,000
Cash 1,400,000
7 December 31, 2021 Interest receivable 30,000
Interest revenue 30,000
8 December 31, 2021 Interest receivable 14,000
Interest revenue 14,000
9 December 31, 2021 Fair value adjustment 10,000
Gain on investments (unrealized, NI) 10,000

Indicate any amounts that Ornamental Insulation would report in its 2021 income statement, 2021 statement of comprehensive income, and 12/31/2021 balance sheet as a result of these investments. Include totals for net income, comprehensive income, and retained earnings as a result of these investments. (Amounts to be deducted should be indicated with a minus sign.)
Income statement:
Interest revenue $60,000
Gain on investments 35,000
Net income $95,000
Statement of comprehensive income:
Net income $95,000
Other comprehensive income
Comprehensive income $95,000
Balance sheet:
Assets
Current Assets
Interest receivable $44,000
Cash
Investments
Investment in bonds $2,300,000
Add: Fair value adjustment 10,000 $2,310,000
Shareholders’ Equity
Retained earnings $95,000

In: Accounting

At June 30, 2017, the end of its most recent fiscal year, Green River Computer Consultants’...

At June 30, 2017, the end of its most recent fiscal year, Green River Computer Consultants’ post-closing trial balance was as follows:

Debit Credit

Cash

 $5,230

Accounts receivable

 1,200

Supplies

 690

Accounts payable

 $400

Unearned service revenue

 1,120

Common stock

 3,600

Retained earnings

 2,000
$7,120 $7,120


The company underwent a major expansion in July. New staff was hired and more financing was obtained. Green River conducted the following transactions during July 2017, and adjusts its accounts monthly.

July 1 Purchased equipment, paying $4,000 cash and signing a 2-year note payable for $20,000. The equipment has a 4-year useful life. The note has a 6% interest rate which is payable on the first day of each following month.
2 Issued 20,000 shares of common stock for $50,000 cash.
3 Paid $3,600 cash for a 12-month insurance policy effective July 1.
3 Paid the first 2 (July and August 2017) months’ rent for an annual lease of office space for $4,000 per month.
6 Paid $3,800 for supplies.
9 Visited client offices and agreed on the terms of a consulting project. Green River will bill the client, Connor Productions, on the 20th of each month for services performed.
10 Collected $1,200 cash on account from Milani Brothers. This client was billed in June when Green River performed the service.
13 Performed services for Fitzgerald Enterprises. This client paid $1,120 in advance last month. All services relating to this payment are now completed.
14 Paid $400 cash for a utility bill. This related to June utilities that were accrued at the end of June.
16 Met with a new client, Thunder Bay Technologies. Received $12,000 cash in advance for future services to be performed.
18 Paid semi-monthly salaries for $11,000.
20 Performed services worth $28,000 on account and billed customers.
20 Received a bill for $2,200 for advertising services received during July. The amount is not due until August 15.
23 Performed the first phase of the project for Thunder Bay Technologies. Recognized $10,000 of revenue from the cash advance received July 16.
27 Received $15,000 cash from customers billed on July 20.


Adjustment data:

1. Adjustment of prepaid insurance.
2. Adjustment of prepaid rent.
3. Supplies used, $1,250.
4. Equipment depreciation, $500 per month.
5. Accrual of interest on note payable.
6. Salaries for the second half of July, $11,000, to be paid on August 1.
7. Estimated utilities expense for July, $800 (invoice will be received in August).
8. Income tax for July, $1,200, will be paid in August.


The chart of accounts for Green River Computer Consultants contains the following accounts: Cash, Accounts Receivable, Supplies, Prepaid Insurance. Prepaid Rent, Equipment, Accumulated Depreciation—Equipment, Accounts Payable, Notes Payable, Interest Payable, Income Taxes Payable, Salaries and Wages Payable, Unearned Service Revenue, Common Stock, Retained Earnings, Dividends, Income Summary, Service Revenue, Supplies Expense, Depreciation Expense, Insurance Expense, Salaries and Wages Expense, Advertising Expense, Income Tax Expense, Interest Expense, Rent Expense, Supplies Expense, and Utilities Expense.

A. Prepare a trial balance at July 31st

B. Journalize and post closing entries and complete the closing proccess

C. Prepare a post-closing trial balance at July 31st.

In: Accounting

Please, use the following info to answer the first two questions. Tesla, Inc. is an American...

Please, use the following info to answer the first two questions.

Tesla, Inc. is an American automaker, energy storage company, and solar panel manufacturer based in Palo Alto, California. Currently, the company produces two models of plug-in electric vehicles. – Model S (luxury sedan) and Model X (crossover SUV). Tesla's ultimate goal is to make eclectic vehicles affordable to everyone, this goal will be realized next year when it releases its newest vehicle, the Model 3. Model 3 has a base price of US$35,000, before any governmental rebates. It will be shipped to buyers in July 2017. The main Tesla’s automobile manufacturing plant is in Fremont, California. YES, Tesla Inc. mainly, produces in USA and after new giga-factory is complete, 95 percent of the parts contained in Tesla vehicles will be made in the United States (something to be proud of).

To help to finance the Model 3 production, Tesla issued common stock and convertible bonds in March 2017 to raise approximately $1.37 billion in cash. Tesla is also using some of the common stock and bond proceeds to grow its recently acquired solar business (SolarCity Inc.) and to supplement other parts of its business. From Tesla’s Inc. 10-Q (Quarterly fillings with SEC):

“In March 2017, we completed a public offering of our common stock and issued a total of 1,536,259 shares for total cash proceeds of $399.6 million (including 95,420 shares purchased by our Chief Executive Officer for approximately $25.0 million), net of underwriting discounts and offering costs.”

In March 2017, we issued $977.5 million in aggregate principal of 2.375% convertible senior notes due in March 2022 (“2022 Notes”) in a public offering. The net proceeds from the issuance, after deducting transaction costs, were $965.9 million.”

Common Stock par value: 0.001.

How was Tesla’s balance sheet impacted by the common stock issuance?

  • A.
    Assets = Liabilities Stockholders' Equity Revenue - Expense = Net Income Statement of Cash flow
    Cash + Prepaid expenses = Notes payable + Common Stock + Additional Paid-in Capital + Retained earnings - =
    $399.6 million + = $399.6 million + + + - = $399.6 million FA
  • B.
    Assets = Liabilities Stockholders' Equity Revenue - Expense = Net Income Statement of Cash flow
    Cash + Prepaid expenses = Notes payable + Common Stock + Additional Paid-in Capital + Retained earnings - =
    $399.6 million + = + $399.6 million + + $399.6 million OA
  • C.
    Assets = Liabilities Stockholders' Equity Revenue - Expense = Net Income Statement of Cash flow
    Cash + Prepaid expenses = Notes payable + Common Stock + Additional Paid-in Capital + Retained earnings - =
    $399.6 million + = + + + $399.6 million $399.6 million - = $399.6 million $399.6 million FA
  • D.
    Assets = Liabilities Stockholders' Equity Revenue - Expense = Net Income Statement of Cash flow
    Cash + Prepaid expenses = Notes payable + Common Stock + Additional Paid-in Capital + Retained earnings - =
    $399.6 million + = + $            1,535 + $399.598million + - = $399.6 million FA

how was accounting equation impacted by the stock issuance?

  • A. Assets increased, liabilities increased, equity increased.

  • B. Assets increased, liabilities unaffected, equity increased.

  • C. Assets increased, liabilities increased, equity unaffected.

  • D. Assets decreased, liabilities unaffected, equity increased

In: Accounting

I haven't been able to make the balance sheet balance while using all the accounts. Please...

I haven't been able to make the balance sheet balance while using all the accounts. Please help.

Using the List of Accounts, create a multiple-step income statement, statement of retained earnings, and classified balance sheet for the year ending December 31, 201x. The multiple-step income statement should also include a section for basic “per-share” amounts for the Income from Continuing Operations and the Net Income line items. Also, create your own company name. These statements should be in an appropriate format. This means that the multiple-step income statement should present gross profit, operating, nonoperating, and nonrecurring items separately. This also means that the classified balance sheet should present current and long-term items separately. The statement of retained earnings only needs to present the “Retained Earnings” column from a Statement of Stockholders’ Equity. For purposes of the “per-share” section, assume that basic and diluted EPS are the same amount (i.e., there are no dilutive securities). Also, assume that the weighted-average number of shares outstanding for both basic and diluted is equal to 300,000 shares.
Account Names VALUE
Accounts Payable $75,946
Accounts Receivable (Gross) $92,816
Accumulated Depreciation (Factory) $450,821
Accumulated Depreciation (Machine Under Capital Lease) $22,265
Accumulated Other Comprehensive Income (Ending) $(22,208)
Additional Paid in Capital-Common Stock $449,821
Additional Paid in Capital-Preferred Stock $59,706
Additional Paid in Capital-Stock Options $65,816
Additional Paid in Capital-Treasury Stock $2,863
Allowance for Doubtful Accounts $4,641
Bad Debt Expense (Selling) $7,219
Bond Issue Cost Expense $2,987
Bonds Payable $132,303
Brands and Trademarks $56,951
Cash $44,025
Common Stock $21,222
Common Stock Dividends Declared $2,279
Copyrights $27,819
Cost of Goods Sold $798,337
Current Marketable Securities (Trading) $37,764
Current Portion of Capital Lease Payable $10,048
Deferred Tax Liabilities $47,293
Depreciation Expense (Factory-Admin) $20,320
Depreciation Expense (Machine Under Capital Lease-Selling) $10,687
Dividend Revenue $7,592
Dividends Payable $1,465
Factory $1,482,092
Gain from Discontinued Operations (Net of Tax) $726
Goodwill $71,263
Income Tax Expense-Current $32,632
Income Tax Expense-Deferred $8,362
Interest Expense $40,523
Interest Payable $3,364
Interest Revenue $8,723
Inventory $153,043
Land $277,925
Long-Term Capital Lease Payable $118,147
Long-Term Investments (HTM) $15,749
Long-Term Marketable Securities (AFS) $18,787
Loss on Extinguishment of Note Payable $77,911
Machine Under Capital Lease $41,063
Pension Expense (Admin) $2,631
Pension Expense (Selling) $14,605
Preferred Stock $9,216
Preferred Stock Dividends Declared $1,342
Premium on Bonds Payable $13,853
Prepaid Rent $2,087
Prepaid Supplies $11,958
Rent Expense (Selling) $100,605
Retained Earnings (Beginning) $179,408
Salaries Payable $7,632
Salary Expense (Admin) $24,489
Salary Expense (Selling) $62,764
Sales Revenue $1,869,331
Supplies Expense (Selling) $2,113
Treasury Stock $65,174
Unamortized Bond Issue Costs $38,574
Unearned Revenue $93,096
Unrealized Loss on Marketable Securities (Trading) $13,806

In: Accounting

Netflix experienced some membership turbulence in 2016 as a price increase was phased in for its...

Netflix experienced some membership turbulence in 2016 as a price increase was phased in for its US subscribers. In May 2014, Netflix announced that the price of its standard subscription service would increase from $8 to $9. However, established customers were allowed to stay at the $7.99 price for two years. In 2015, Netflix increased the standard price to $9.99. As a result of the pricing plan and the deferred price increase, in May, 2016, the standard pricing plan for long time customers of Netflix increased from $7.99 per month to $9.99 per month. Netflix began notifying customers in April that the price increase would become effective in the second quarter.

Netflix was trying to implement price increases more slowly after a 2011 increase led to negative publicity and a customer backlash. In that case, Netflix separated its streaming and DVD services, and charged separately for both services.

However, regardless of the implementation of the price increase, the higher monthly prices seem to have impacted the growth of membership among US subscribers. In the two quarters before the price increase, Netflix added net membership of 1.6 million and 2.2 million members. By contrast, the number of members added in Q2 was only 160,000, and in Q3 only 400,000. The Q2 growth in US subscribers was the lowest since Netflix began reporting those numbers in 2012.

US Streaming (millions)

Q2 2015

Q3 2015

Q4 2015

Q1 2016

Q2 2016

Q3 2016

Revenue

1026

1064

1106

1161

1208

1304

Contribution Profit

340

344

379

413

414

475

Contribution Margin

33.1%

32.3%

34.3%

35.6%

34.3%

36.4%

Paid Memberships

41.1

42.1

43.4

45.7

46.0

46.5

Total Memberships

42.3

43.2

44.7

47.0

47.1

47.5

Net Additions

0.90

0.88

1.56

2.23

0.16

0.40

Monthly Revenue per Paid Member

$       8.33

$       8.43

$       8.49

$       8.47

$       8.75

$         9.40

Percentage Chg. Rev

3.7%

3.9%

5.0%

4.0%

7.9%

Percentage Chg. Memberships

2.5%

3.2%

5.3%

0.6%

0.9%

Source: Netflix 10Q Q3, 2016

1) In 2016 Netflix allowed its prices to increase for U.S. subscribers. Using the data on monthly revenue per paid member in the quarter before the price increase and at the end of the third quarter in 2016, calculate the percentage change. We will use it as a proxy for the percentage change in price.

2) Determine the average membership growth (net additions) before the price increase.

3) Using the projections in the previous question, assuming the growth rate would have stayed the same, how many subscribers Netflix may have expected to add in the 2nd and 3rd quarters of 2016 if it didn't allow the price to increase? How many subscribers did Netflix actually add in the 2nd and 3rd quarters of 2016? Comparting the two numbers how many subscribers were gained/lost due to price increase? What percentage change does it represent relative to the subscribership level in the quarter before the price change (use Total Memberships)?

4) Using the percentage changes in the price and subsriberships calculated in the previous questions, determine the own price elasticity of demand.

5) What do we expect to happen to Netflix's revenue due to the price increase?

In: Economics

Atlantic City Hospital owns and operates a local hospital. It also leases unused space, including beds...

Atlantic City Hospital owns and operates a local hospital. It also leases unused space, including beds to other businesses that offer related services such as Physical Therapy and Long-Term Care. Atlantic City charges each company for common services provided such as laboratory and xray services. The hospital charged the following costs to Long Term Care for the year ended June 30,2018:

Variable Expenses Fixed Expense
Food Service $560,000.00
Xray Service 71000
Laundry $250,000.00
Lab costs $430,000.00
Pharmacy Services $310,000.00 Variable Expenses are charged
Repairs and Maintenance 33000 for patient days
General and admistrative 1300000
Rent 1540000 Fixed expenses are charged
Bill and collections $250,000.00 based on bed capacity leased
Total $1,800,000.00 2944000

During the year ended June 30, 2018, Long Term Care charged each patient an average of $500 per day, had availability of 80 beds and had revenue of $6 million for 365 days. In addition, Long Term Care directly employed personnel with the following annual salary costs per employee: supervising nurses $26625; nurses $20,200 and cna's $8500.The hospital has the following minimum departmental personnel requirements, based on total annual patient days:

Annual Patient Days Nurse aid (CNA) Nurses Supervisor Nurses
Up to 20,000 20 10 4
20,001 to 25,000 25 14 5
25,001 to 30,000 31 16 5

Long Term care always employs only the minimum number of supervising nurses and nurses but operates with 5 additional aides than the minimum required by the hospital. Salaries of supervising nurses, nurses and CNA's are fixed within ranges of annual patient days.

Long Term care operated at 100% capacity on 80 days during the year ended June 30, 2018. The hospital estimates that on the 80 days, Long Term care could have filled another 20 beds above capacity. The hospital has an additional 20 beds available for lease for the year ending June 30, 2019. The additional leased beds would increase Long Term care's fixed charges based on bed capacity. (ignore income taxes).

1. Calculate the break-even patient days for Long Term care for the year ending June 30, 2019, assuming 20 extra beds are not leased. Assume all other data and rates from June 30, 2018 remain the same.

2. Determine the net increase or decrease in Long term care's earnings for the year ending June 30, 2019 from the additional beds if Long Term care leased this extra capacity from Atlantic City Hospital. Create a schedule of Long Term care's increase in revenue and increase in costs for the year. The number of additional patient days is based on using the additional beds when at max capacity. Assume patient demand, revenue, variable and fixed rates from June 30,2018 remain the same.

3. Should Long term care lease the additional 20 beds for the year ending June 30, 2019?

4. If max capacity were to increase and the additional beds were needed for more than 80 days at what number of days would they willing to lease the additional 20 beds? Calculate the break-even (patient days) for Long Term care to lease the additional beds. Only consider the revenue and expenses calculated in question #2.

In: Accounting